Leave including its types and scales is a benefit available to paid employees as per any labor law applicable or service regulations or the contract of employment. If so, how the employer can deduct the employee's salary proportionately against the leave taken? Except earned leave, all other types of leave are lapsable within the calendar year itself. EL alone can be accumulated to certain limit and be surrendered for cash benefits. Therefore, since the surrender leave is the additional cost incurred by the employer, it can be added to the CTC.
13th July 2018 From India, Salem
You have raised a debatable query whether the cost equivalent to 30 days authorized leave ( payment for non- working days) should form part of CTC.
If you look at from employer's point of view , everything that is spent on employee is a cost to the company. For example, subsidized /free food expenses, free transport , all welfare related expenses. But traditionally and for whatever reasons everything is not counted in CTC and such cost items which are related to welfare expenses including cost of leaves are excluded from the reckoning. Here it is not question what is right or wrong but predominantly what is largely being currently practiced which perhaps may undergo change in future.
Therefore, to include the cost incurred for 30 days' leave is not in line with current widespread industry practice.
16th July 2018 From India, Mumbai
As per Umakanthan.M sir "Since the surrender leave is the additional cost incurred by the employer, it can be added to the CTC".
As the question is raised for paid leaves, if employee wants to to avail all leaves provided by the company and does not want to surrender any leave then in this case isn't by adding Leave Encashment in CTC are we not making compulsion on employees not to avail leave as this will cost low in hand salary to employee.
Now a days most of the companies are discouraging Leave Encashment. Even they are forcing their employees to avail their outstanding leave to meet family/social responsibilities. This will create good working atmosphere and through this employer will obtain maximum out put from manpower.
As in this matter option should be left with employee whether it wants avail Leave or go for Leave Encashment. Any types of Leaves should not be a part of CTC it should be over and above of CTC.
Any how leave is the legal right of employee and by adding this into CTC we will promote Bonded Labour Culture.
16th July 2018 From India, Bagholi